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Profit margins and cash flows improve, perversely, in a period of low growth. Initially, companies cut costs, improving profitability. As revenues are stagnant, companies have no need to invest in expanding capacity or working capital, releasing cash flow. Reduction in depreciation charges and the ability to use cash flow to reduce debt reduces interest expenses. In the present cycle, sharp decreases in interest rates, though not necessarily interest margins, have also improved profit margins. Cost-cutting, productivity improvements and restructuring cannot be repeated endlessly.

The buildup of cash on corporate balance sheets is frequently cited as a sign of corporate health. In the U.S., since 2008, companies have been net lenders rather than borrowers and now hold around US$1 trillion in cash. Japanese companies hold liquid assets of US$2.8 trillion. European companies also hold large cash balances. Mark Carney, the newly appointed Bank of England governor, referred to the $300 billion of cash held by companies in his native Canada as "dead money."

The high cash balances reflect uncertainty about future financing conditions and the willingness of banks to lend. But it primarily reflects the lack of investment opportunities.

Changing demographics affect stocks. Investors approaching retirement may switch to more defensive assets and seek steady income, favouring bonds and cash. Low and declining returns over time have also undermined demand for equities. The reduction is evident in outflows from equity funds into other assets.

The stock market likes an economy that seems to be growiing not too fast or not too slow. As long as the market perceives slow growth and little inflation its likely to rise. I believe the housing market is driving the economy and market. A few years ago when the housing market was strong, the economy did well. When the housing market collaspsed we went into the worst recesssion in years. Now that the housing market is improving, so is the economy. Nothing dramatic, just slow and steady for now.

Never heard much on how your housing is doing. It would be good if it recovers. A lot of wealth is tied up in it.

The only way to boost consumption is to put money in the peoples hands. Not take it

Which is what the banks did and it worked. But it was not the result of good business practices. Heck, you could say the governments have been doing the same with their programs that put money into the economy, without it we would probably be in worse shape, mind you there is a cost to it.

But as far as the stock market is concerned I think it is a lot of people that want their cash to work for them and are tired of getting not much return these last years. It is boosting the valuations but without the economies rising it may just be a game of musical chairs and the ones that get out of the pyramid scheme (stock market) early will do well and the others holding the bag. It is not like growth is fueling it, there is no new technologies changing the landscape (although cheaper natural gas from fracking may be a mild boost). Cheap energy really would change the game but China and the rest of the developing world would lap it up given lower energy costs.

Speaking of fracking.

Never argue with a fool, onlookers may not be able to tell the difference. —Mark Twain

The only way to boost consumption is to put money in the peoples hands. Not take it

Originally Posted by printer2

Which is what the banks did and it worked. But it was not the result of good business practices. Heck, you could say the governments have been doing the same with their programs that put money into the economy, without it we would probably be in worse shape, mind you there is a cost to it.

You have to keep in mind that money given to the federal government results in part of that money being wasted. If the money was in the pockets of citizens directly, that money would go further than if the federal government first had it's hands on it.

Remember. Government doesn't produce anything of value. It only redistributes at great loss and waste.

Governments don't tax to get the money they need, governments will always find a need for the money they get.Ronald Wilson Reagon

You have to keep in mind that money given to the federal government results in part of that money being wasted. If the money was in the pockets of citizens directly, that money would go further than if the federal government first had it's hands on it.

Remember. Government doesn't produce anything of value. It only redistributes at great loss and waste.

Doesn't matter that the government wastes it or not, the money still goes in people's pockets or some takes a detour in others pockets, the effect on the economy is the same. More money to be spent on goods.

Never argue with a fool, onlookers may not be able to tell the difference. —Mark Twain

Doesn't matter that the government wastes it or not, the money still goes in people's pockets or some takes a detour in others pockets, the effect on the economy is the same. More money to be spent on goods.

Oh! , Like giving tons of money to third world dictatorship countries that hate us? Yeah it goes into somebody elses pockets allright.

Money for domestic departments gets handily wasted because the way those departments work is that if they don't waste the excess money in their budget by the end of the budget term they know that their budget may be reduced. So some departments intentially waste office equipment, computers etc as to say they don't have enough operating budget in the future.

Governments don't tax to get the money they need, governments will always find a need for the money they get.Ronald Wilson Reagon

Oh! , Like giving tons of money to third world dictatorship countries that hate us? Yeah it goes into somebody elses pockets allright.

Money for domestic departments gets handily wasted because the way those departments work is that if they don't waste the excess money in their budget by the end of the budget term they know that their budget may be reduced. So some departments intentially waste office equipment, computers etc as to say they don't have enough operating budget in the future.

Printer just likes to argue... If you told him the sky was blue... he would find a link saying it was green-grey with pink poke-a-dots...